Exporters tackle freight in different ways, depending on the demands of the product, the target market, and regulations there and here.
Joe Parkes examines freight problems they’ve solved and others looming in the rapidly changing world of transportation.
What’s the toughest part of getting an export product ready for sale? Is it the production process, or the often complex transportation process of getting it safely and swiftly into the hands of its purchasers?
If you ask Marcus Coban, export manager of the Sydney-based, family-owned and run, diving and water-sports equipment supplier, Land and Sea Sports, it’s usually the delivery route. "Getting things into the United States is especially difficult," he laments. "They are very demanding even to the point of requiring we break down every single component in a dive-watch on their Customs forms."
But it isn’t the paperwork; it’s the transport that makes the going tough for Coban when he sends the company’s diving gear to buyers in remote parts of the Pacific, like Micronesia. "It is a challenge to get your products to islands that are just specks on the map," he says. "Challenging and costly. Sometimes a seafreighter will only go so far and then your freight has to go on by canoe or putt-putt boat to reach customers—mostly astute business people who’ve opted for a change in lifestyle and started up dive shops in some really remote areas.
"In the beginning we spoke to these customers to see how they managed to get other products in, and tracked down other exporters doing business there to see how they coped. Then it’s a matter of finding someone who will take the freight. We now use several freightforwarders who specialise in specific locations.
"For Micronesia we’ve built up a good relationship with a guy who goes there once a month—taking beers and frozen food to remote locations—and we get space in his container. It’s a matter of doing your homework."
In some cases, it’s more practical to use Australia Post to get smaller shipments to remote markets. "Any cargo up to 10 kilos we send by post, for between 10 and 20 kilos we use one of the big carriers like TNT or DHL," Coban says. "Freight over 20 kilos—the vast majority of our exports—we send by sea."
Matthew Sisley, manager of Sisley Clothing Australia in Newcastle, has found postal services are perfect for exports of the company’s Australia-made lines of flight suits, aviation clothing, and fire retardant and safety clothing to clients in Asia and the Pacific. "We don’t use seafreight at all and use airfreight rarely," he says. "Postal costs are more competitive than freight so, unless it is really urgent, we use the post."
Land and Sea Sports has started using more airfreight since expanding its export horizons to include the US, Portugal, the Seychelles and the Maldives Islands.
But far and away the biggest airfreighted export from Australia is neither a luxury item nor a fragile product. It’s pork. Some 1,800 tonnes of chilled pork a month is airfreighted to Singapore, and has been for the past five years.
Mike O’Neill, chairman of the Air Freight Council of Australia and DHL Global’s manager for Perishables and Livestock in the South Pacific, says Singaporean consumers prefer to get their pork as fresh as possible so it is airfreighted, despite being a relatively low-value product. "Because Singapore is the most highly serviced port out of Australia, and because of consumer perceptions about freshness, it has been both possible and viable to turn airfreighted pork exports into a big industry," he says.
David Bendall, director of Maritrade, a company that provides market research, cargo statistics, investment analysis and economic studies to ports, shipowners, shipbuilders and the Government, believes overseas sales of foodstuffs are just beginning to build their way out of a slump that has seen exports drop by about 30 percent over the last 10 years.
Bendall, a former federal president of the Australian Institute of Export, partly blames the drought and overseas competition for the slump, but believes many Australian food exporters simply "looked at the returns they were getting and decided to walk away from it".
Transport Options
Those who’ve opted to keep going in the export business are still being confronted with having to decide what transport system is best to carry their products and whether it is better to try organising it yourself or trust someone else to handle the details. Once that’s been worked out, the exporter must then try to ensure everything goes to plan when products reach their market destination.
According to Mike O’Neill, there’s a simple answer to these questions. "The most important decision an intending exporter makes is in choosing the right freightforwarder for the job," he says. "Some 98 percent of all exports that go by air are handled by freightforwarders, mainly because the airlines don’t want to deal directly with individual exporters and often aren’t in a position to do so."
But he admits that when dealing with seafreight it becomes a different proposition. "Shipping lines in Australia work hard to exclude forwarders from the equation," he says. "The shipping lines believe that if forwarders are involved they lose some control over the traffic, and they’re not happy to let go any of that. Shoppers actively encourage exporters to go directly to them and the commercial environment in Australia allows them to do just that."
Freightforwarders can handle seafreight documentation for exporters but there are rarely cost savings to be made from having them book shipping, O’Neill says. Still, a lot of exporters wouldn’t dream of sending their products offshore without the assistance of a freightforwarder.
Michael Langtry, sales and marketing manager for the Byron Bay Cookie Company, is an enthusiastic supporter of freightforwarders who handle the company’s exports to 12 overseas markets. Getting products to the world from Byron Bay on the northern NSW coast means first getting them safely to port and then on to markets from Britain to Austria, Russia, Japan, the Middle East and the US.
It’s a pattern familiar to Matthew Freeman, director of Dairy Marketing International at Nunawading in Victoria. "We have learnt through trial and error," he says. "We send 60 tonnes of product a year overseas, trucking our exports on palettes, using refrigerated transport, for delivery to our preferred logistics firm in Melbourne where they are either loaded onto aircraft or packed into a container to be shipped out through Port Melbourne."
He sometimes finds AQIS demands for quality and health control of food exports "a bit tiresome. But you have to grin and bear it because, ultimately, these regulations are beneficial. Anyone who complains is not serious about export. Getting your products overseas is not enormously difficult if you have the right freightforwarder working with you as a partner. You make sure your customers know when the product arrives so they can get it into a refrigerator as soon as possible."
Many cheeses can survive a few bumps along the way, but Byron Bay’s cookies need lots of TLC. No one at Byron Bay is prepared to accept that damage is simply a case of ‘that’s the way the cookie crumbles’.
"You must insure your products to levels required in different countries or you could end up losing a lot of money," he says. "We ask our buyers who they recommend as insurers."
Sisley, however, says his company never bothers with insurance because "it would never be able to cover
the costs of the specialist garments—at $1,000 a piece—the company supplies".
"We prefer to ensure each consignment is fully trackable instead," he adds.
Langtry sees insurance as part of the service provided by freightforwarders.
Analysing Logistics
It’s the journey that exports take between the company plant and the outbound port that particularly interests Stuart St Clair, CEO of the trucking industry’s peak body, the Australian Trucking Association (ATA).
He urges exporters to approach export logistics by first deciding what they want to achieve and then getting a qualified logistics expert to recommend the best solution. "An exporter’s job is to get the product made and sold – not to try making decisions on freight movements," St Clair says. "I am sure exporters who really want to succeed need to focus on who their customers are and focus specifically on supplying that market. Make sure you pick the best logistics supplier for the job before you start worrying about the price."
St Clair says he is confident that a much closer understanding is emerging among road transporters about the need to keep watch on the costs of running a business. "The rising costs of everything from fuel prices to security to government fees means that exporters are going to be paying more for their export transport services, but I’m hoping Australians won’t follow overseas exporters who seem to choose their freight carriers based solely on price.
"Australians are keener on developing loyal relationships with their transport operators, so the smart thing to do is to use that loyalty to get improvements in freight productivity.
"Today, all big transport operators are multi-modal and many of them offer a comprehensive logistics delivery service. Some deliveries could involve road, rail and even air before the export product arrives at its ultimate destination. So ask a competitive multi-model transport supplier to suggest the best path to follow."
St Clair points out that road transport carries 80 percent of Australia’s internal non-bulk freight and is expected to double between 2005 and 2020.
New Roads
A classic image of Australia’s export industry is of a mighty road train, thundering through bulldust on a brick-red outback road, bringing beef, agricultural products and minerals to port. The question is: for how much longer?
John Morris, Dubbo-based executive director of the Australian Road Train Association, says the era of the smaller owner-operator is drawing to a close with an estimated 110,000 truck drivers leaving the industry, either to retire or to move on to some other occupation.
"Spiralling costs have really stretched the profit margins for small operators and, even with some reduction in the government fuel levy, long-haul truckers servicing rural exporters have seen their profits trimmed back from an average 25 or 30 percent to little more than two to five percent," he explains. "Between the drought and over-regulation by the states, the road trucking industry is increasingly in the hands of major companies and few want to do small jobs, which may make life harder for small exporters. Smaller operators in rural areas are in danger of extinction and small growers and processors wanting to export are beginning to disappear too."
Australian Trucking Association CEO, Stuart St Clair, believes the country—including the trucking industry—is about to see a major move by the agricultural industry back to the north-west corner of Western Australia round Kununurra in the Kimberley.
"There are huge developments in vegetable and fruit production there, using genetic modelling of plants to eventually beat the problem of insect pests," he says. "It will be an important change for Australia but an essential one because the drought is going to be felt for a long time."
The most positive development facing the trucking industry in Australia will be the introduction of new B-Triple vehicles, which have the same deck capacity as a road train with two 12-metre trailers but comprise one major truck vehicle followed by two six-metre trailers.
According to the Federal Government, the latest available figures on total funding for road-related expenditure by the Australian, state, territory and local governments was $8.8 billion, including donations from the non-public sector. Total road-related expenditure increased by an average of four percent per year.
